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Budget Analysis

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Union Budget was presented in the parliament on February 29th, 2016. ICR team has tried to capture the impact of the budget on cement, infrastructure and real estate as viewed by CRISIL Research and various experts in the industry.

CRISIL Budget Analysis
Cement, impact positive
Higher spending on infrastructure to benefit in medium term Positive

Key budget proposals:

  • Investment towards national highways increased by 49 per cent to Rs 1032 billion (budgetary plus internal and extra budgetary resources).
  • Rs 170 billion for irrigation projects under Accelerated Irrigation Benefit Project.
  • Outlay towards urban infrastructure increased 11 per cent to Rs 166 billion.
  • Ready mix concrete manufactured at the site of construction exempted from excise duty.
  • Clean energy cess on coal (domestic and imported) doubled to Rs 400 per tonne.

CRISIL Research?s View:
The government?s focus on infrastructure is evident with the total targeted spending in FY17 increasing 28 per cent over FY16.
This, along with a number of benefits provided on affordable housing, would aid recovery in cement demand. Further, the rise in duties and tariffs in the form of clean cess on coal is expected to have a muted impact on total cost, which is expected to increase 0.2 per cent. Power and fuel cost (~25 per cent of cost of sales) will increase 1 per cent. However, amid rising demand, players will be able to offset this with a hike in prices.

Infrastructure, impact positive
Focus on dispute redressal, tax clarifications to aid investor confidence Positive Key budget proposals:
Budgetary allocation: Total outlay for infrastructure has been increased by 28 per cent to Rs 3.4 trillion (roads, railways and power the biggest beneficiaries). Of this, Rs 1.29 trillion is on account of budgetary support
Roads: Investments for development of national highways is proposed to be hiked 49 per cent on-year to Rs 1032 billion.
This is on the backdrop of spending being 16 per cent lower than FY16 budgeted estimates in the segment
Railways: Total outlay raised by 24 per cent to Rs 1,210 billion. In Railway Budget FY17, there have been numerous announcements for improvement of port connectivity and three new dedicated freight corridors
Airports & ports: No new projects announced barring Rs 8 billion earmarked for greenfield ports and national waterways. Overall, outlay for civil aviation has been reduced by 30 per cent to Rs 44 billion, mainly in line with reduced equity support to Air India
Funding availability: The government has provided flexibility for select state entities to raise capital up to Rs 313 billion by way of bonds across infra segments
Other measures: Dividend distribution tax waiver to be applicable on income distributed from SPVs to INVIT holding entity. Furthermore, a mechanism to renegotiate of contracts and a public utility bill will be introduced to streamline resolution of disputes in infrastructure related construction contracts

CRISIL?s View
The Budget reiterated focus on roads and railways with almost 76 per cent of the incremental government spending (budgetary allocation plus inter and extra budgetary resources) focused on these two segments. Also, the increase in budgetary allocations of Rs 250 billion towards various infra segments were muted compared with Rs 1090 billion in the last Budget.

This clearly reinforces a shift in funding dependence from government outlays to cash flows of government entities and their borrowing capability to drive public investments in the sector.Of the Rs 250 billion incremental budgetary support, almost Rs 130 billion is directed towards railways, followed by Rs 40 billion towards power, Rs 30 billion for urban development and Rs 25 billion, for roads, respectively. Given the targets relating to electrification of villages, the Budget provides a thrust on investments in the distribution segment of power with a 84 per cent on-year increase in planned expenditure for key schemes.

For EXIM-focused sectors such as airports and ports, focus on single window customs clearance, backed by process simplification, is targeted towards de bottlenecking of capacity amid lower budgetary allocations.

The Budget continued to build up investor confidence for investing in infrastructure segments by providing clarity on dividend distribution tax for entities like INVITs and giving confirmation on contract renegotiation and introduction of the public disputes utility bill. This comes at a time when private sector interest in infrastructure development is low and the balance sheets of many developers in the sector remain stretched.

We believe the rise in overall government spends will boost execution of national highway projects to about 5,200 km annually in 2016-17 and create a robust construction opportunity for road and railway engineering procurement & construction companies.

While the Budget provisions are positive, it will continue to put to test the execution capability of implementing agencies such as the National Highways Authority of India and Indian Railways. This comes on the backdrop of overall spending in national highways being 16 per cent lower in FY16 as compared with the allocations. Addressing on-ground issues such as clearances and land acquisition becomes extremely critical to ensure a sharp increase in project execution.

Real Estate:
Affordable housing gets a shot in the arm; commercial realtors also benefit Positive

Key budget proposals:

  • Measures on affordable housing projects

  • Interest deduction limit under Sec 80EE increased from Rs 1 lakh to Rs 1.5 lakh for first-time home buyers (applicable only on loans not exceeding Rs 35 lakh for houses costing below Rs 50 lakh and sanctioned during April 1, 2016, to March 31, 2017) for the entire loan duration

  • Under the Pradhan Mantri Awas Yojana, 100 per cent deduction on profits from housing projects approved between June 2016 and March 2019, and completed in three years of getting approval and satisfying the following conditions, refer to Table 1

  • Service tax exemption on construction of affordable houses up to 60 square meters (646 sq ft) under any central or state government scheme, including public-private partnerships (PPPs)

  • Phasing out of deductions allowed on capital expenditure (other than land, goodwill and financial assets) under Sec 35AD from 150 per cent to 100 per cent w.e.f. April 1, 2017, for affordable housing projects

  • Exemption of dividend distribution tax (DDT) on distribution made by special purpose vehicles (SPVs) to real estate investment trusts (REITs)

  • Revival of national land record digitisation scheme with a funding of Rs 1.5 billion

  • 0.5 per cent Krishi Kalyan Cess on all taxable services

CRISIL Research?s View
Boost to affordable housing – especially tier II and tier III cities

Affordable housing segment has received a shot in the arm with the abovementioned measures and will see increased demand and PPPs in the medium term.

Increase in interest deduction for first-time home buyers will boost demand for homes priced in that bracket. Currently, nearly 40 per cent of the upcoming supply in the 10 major cities tracked by CRISIL Research is priced under Rs 50 lakh. The proportion of upcoming supply in this price bracket in tier II and tier III cities is expected to be even higher.
Refer to Graph 1

Table-1

(sq mt) 4 Metros Other cities
Maximum size of house 30 60
Minimum size of land parcel 1,000 2,000
Other,Within 25 km of municipal limit

However, the phasing out of deductions on capital expenditure will be a dampener to some extent.
Removal of DDT for SPVs distributing income to REITs is a positive for developers with significant exposure to rental-yielding real estate assets.
Digitisation of land records will aid transparency in the real estate sector and help tap foreign capital inflows in the medium to long term.
Krishi Kalyan Cess, applicable for under-construction projects, will hurt the industry marginally.
However, minimum alternate tax will apply.
Union Budget 2016-17 brings hopes of revival for the cement industry

?Rs 97,000 crore of outlay that has been kept for roads and infra by the finance minister is very promising and the industry will get a lot of benefits from this particular allocation of funds,? said Amandeep Gupta, joint CEO of OCL Cement, the flag ship company of Dalmia Group.

Middle and low income groups are benefitted by providing exemption on service tax on construction of affordable home and increase in tax exemption on home loan, a boost to first time home buyers. That makes housing more affordable. Infrastructure being part of the key pillars of the budget is something to look forward to in the long run. With 85% road projects coming back on track.

The industry has also acknowledged that the finance minister?s approach for this budget has been very targeted. ?He has laid a structure for an inclusive growth rather than distributing subsidies,? said Gupta.

The cement sector for quite some time had been asking for the removal of excise duty on ready-made cement, which was 12.5 per cent. The industry among its recommendations to the government has also been asking for the initiatives to lower the tax burden on the industry. In its annual report 2014-15, CMA acknowledged that cement is highly taxed at 60 per cent of ex-factory price, which is even more than the taxes levied on the luxury items.

?Exemption of excise duty on RMC is one of the encouraging moves taken by the finance minister. This step is another value addition in making the budget positive for the cement sector,? said MS Mani, senior director, Deloitte.

Source: ECONOMIC TIMES

Doubled Coal Cess to increase power tariff by 15 paisa/unit
The effort of the NDA government to give enhanced push to clean energy and environment conservation would lead to spiking of power price. The government for the third time in a row increased the cess on coal, lignite and pite production to Rs 400 per tonne to fund clean energy projects.

As the increase in price of coal comes under ?change of law? regulation of the Electricity Act and Tariff Policy, any change in price would be reflected in the final power tariff. As per industry calculations, this would amount to a change of 12-15 paisa per unit in the final power tariff.

Indian power industry consumes close to 500 million tonne of coal annually and with doubling of cess, close to 800 billion units of electricity will witness the impact of increased price of coal.

During the current fiscal, the coal cess collected was around Rs 12,000 crore taking the total to Rs 50,000 crore.

In the last Union Budget, cess on coal was doubled to Rs 200 per tonne. In his maiden budget in July 2014, Arun Jaitley increased it to Rs 100 per tonne from Rs 50 per tonne. The cess is collected as National Clean Energy Fund and is disbursed for renewable energy based initiatives and power projects.

But with the change in name to Clean Environment Fund, it is expected that the fund would be used for environment conservation drives of the government as well.

The heavy weight projects depending on NCEF for their funding are Rs 40,000 crore Green Energy Corridor project and to be launched National Wind Energy Mission, which will entail a total expenditure of Rs 18,000 crore.

Source: BUSINESS STANDARD

Steel, cement to cost more
Shailendra Chouksey, President, Cement Manufacturers? Association, and whole-time director, JK Lakshmi Cement, said cement prices would rise by? 3-4 a bag just on account of the clean environment cess.

?The total tax incidence on cement is over 60 per cent of the ex-factory realisation. The Krishi Kalyan Cess at 0.5 per cent on all taxable services from June 1 will push up production costs further,? he added.

Ready-mix woes
Ready-mix concrete (RMC) players believed that their long-pending demand of exemption of excise duty on RMC plants has finally been addressed but it is applicable only to dedicated RMC plants on site, the percentage of which is almost negligible, said Chouksey.

Ajay Kapur, Managing Director, Ambuja Cements, said while profitability of the cement industry would be impacted by the increase in cess, the excise on HDPE (high-density polyethylene) packaging bags (for 12.5 per cent to 15 per cent) and decrease in sale commission (from 10 per cent to 5 per cent) would add to the industry?s woes.

Source: THE HINDU BUSINESS LINE

Mahendra Singhi, Group CEO-Dalmia Cement in conversation with ICR
The focus of the budget has been on rural India and finance minister has thought ?how to boost up the economy?? Larger attention has been paid to the farm sector. FM?s efforts will have multiplying effect on the economy.

The second important aspect of the budget is allocation for infrastructure. Never before such allocation was done. There are many projects which have been held up and some remedial measures are required to be taken to rescue these projects. Funds have been made available for not just highways but also for ?Pradhan Mantri Gram Sadak Yojana? which is mainly for rural India. The allocation for MNREGA is another positive feature of rural focus.

We were expecting industry status will be given to infrastructure but that did not happen. Irrigation has been provided separate funding which is a long term investment and it is certainly a welcome feature of the budget.

The enhancement of carbon cess to Rs. 400 will have some impact but it is a movement in the direction of Green Energy. It will support generation of Solar and Wind power.

While giving concessions, the budget takes into account affordable housing, rental housing and first time home buyers.The taxation on provident fund withdrawn is some how difficult to digest. It is slightly going against the principles of saving habits.

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Concrete

Fornnax Unveils the World’s Largest NPD and Demo Centre to Accelerate Global Recycling Innovation

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A 12-acre innovation campus enables Fornnax to design, test and validate high-performance recycling solutions at global standards in record time.

Fornnax has launched one of the world’s largest New Product Development (NPD) centres and demo plants, spanning more than 12 acres, marking a major step toward its vision of becoming a global recycling technology leader by 2030. Designed to accelerate real-world innovation, the facility will enable faster product design cycles, large-scale performance validation, and more reliable equipment for high-demand recycling applications.

At the core of the new campus is a live demo plant engineered to support application-specific testing. Fornnax will use this facility to upgrade its entire line of shredders and granulators—enhancing capacity, improving energy efficiency, and reducing downtime. With controlled test environments, machines can be validated for 3,000 to 15,000 hours of operation, ensuring real-world durability and high availability of 18–20 hours per day. This approach gives customers proven performance data before deployment.

“Innovation in product development is the key to becoming a global leader,” said Jignesh Kundariya, Director and CEO of Fornnax. “With this facility, we can design, test and validate new technologies in 6–8 months, compared to 4–5 years in a customer’s plant. Every machine will undergo rigorous Engineering Build (EB) and Manufacturing Build (MB) testing in line with international standards.”

Engineering Excellence Powered by Gate Review Methodology

Fornnax’s NPD framework follows a structured Gate Review Process, ensuring precision and discipline at every step. Projects begin with market research and ideation led by Sales and Marketing, followed by strategic review from the Leadership Team. Detailed engineering is then developed by the Design Team and evaluated by Manufacturing, Service and Safety before approval. A functional prototype is built and tested for 6–8 months, after which the design is optimised for mass production and commercial rollout.

Open-Door Customer Demonstration and Material Testing

The facility features an open-door demonstration model, allowing customers to bring their actual materials and test multiple machines under varied operating conditions. Clients can evaluate performance parameters, compare configurations and make informed purchasing decisions without operational risk.

The centre will also advance research into emerging sectors including E-waste, cables, lithium-ion batteries and niche heterogeneous waste streams. Highly qualified engineering and R&D teams will conduct feasibility studies and performance analysis to develop customised solutions for unfamiliar or challenging materials. This capability reinforces Fornnax’s reputation as a solution-oriented technology provider capable of solving real recycling problems.

Developing Global Recycling Talent

Beyond technology, the facility also houses a comprehensive OEM training centre. It will prepare operators and maintenance technicians for real-world plant conditions. Trainees will gain hands-on experience in assembly, disassembly and grinding operations before deployment at customer sites. Post-training, they will serve as skilled support professionals for Fornnax installations. The company will also deliver corporate training programs for international and domestic clients to enable optimal operation, swift troubleshooting and high-availability performance.

A Roadmap to Capture Global Demand

Fornnax plans to scale its offerings in response to high-growth verticals including Tyre recycling, Municipal Solid Waste (MSW), E-waste, Cable and Aluminium recycling. The company is also preparing solutions for new opportunities such as Auto Shredder Residue (ASR) and Lithium-Ion Battery recovery. With research, training, validation and customer engagement housed under one roof, Fornnax is laying the foundation for the next generation of recycling technologies.

“Our goal is to empower customers with clarity and confidence before they invest,” added Kundariya. “This facility allows them to test their own materials, compare equipment and see real performance. It’s not just about selling machines—it’s about building trust through transparency and delivering solutions that work.”

With this milestone, Fornnax reinforces its long-term commitment to enabling industries worldwide with proven, future-ready recycling solutions rooted in innovation, engineering discipline and customer collaboration.

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Concrete

Balancing Rapid Economic Growth and Climate Action

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Dr Yogendra Kanitkar, VP R&D, and Dr Shirish Kumar Sharma, Assistant Manager R&D, Pi Green Innovations, look at India’s cement industry as it stands at the crossroads of infrastructure expansion and urgent decarbonisation.

The cement industry plays an indispensable role in India’s infrastructure development and economic growth. As the world’s second-largest cement producer after China, India accounts for more than 8 per cent of global cement production, with an output of around 418 million tonnes in 2023–24. It contributes roughly 11 per cent to the input costs of the construction sector, sustains over one million direct jobs, and generates an estimated 20,000 additional downstream jobs for every million tonnes produced. This scale makes cement a critical backbone of the nation’s development. Yet, this vitality comes with a steep environmental price, as cement production contributes nearly 7 per cent of India’s total carbon dioxide (CO2) emissions.
On a global scale, the sector accounts for 8 per cent of anthropogenic CO2 emissions, a figure that underscores the urgency of balancing rapid growth with climate responsibility. A unique challenge lies in the dual nature of cement-related emissions: about 60 per cent stem from calcination of limestone in kilns, while the remaining 40 per cent arise from the combustion of fossil fuels to generate the extreme heat of 1,450°C required for clinker production (TERI 2023; GCCA).
This dilemma is compounded by India’s relatively low per capita consumption of cement at about 300kg per year, compared to the global average of 540kg. The data reveals substantial growth potential as India continues to urbanise and industrialise, yet this projected rise in consumption will inevitably add to greenhouse gas emissions unless urgent measures are taken. The sector is also uniquely constrained by being a high-volume, low-margin business with high capital intensity, leaving limited room to absorb additional costs for decarbonisation technologies.
India has nonetheless made notable progress in improving the carbon efficiency of its cement industry. Between 1996 and 2010, the sector reduced its emissions intensity from 1.12 tonnes of CO2 per ton of cement to 0.719 tonnes—making it one of the most energy-efficient globally. Today, Indian cement plants reach thermal efficiency levels of around 725 kcal/kg of clinker and electrical consumption near 75 kWh per tonne of cement, broadly in line with best global practice (World Cement 2025). However, absolute emissions continue to rise with increasing demand, with the sector emitting around 177 MtCO2 in 2023, about 6 per cent of India’s total fossil fuel and industrial emissions. Without decisive interventions, projections suggest that cement manufacturing emissions in India could rise by 250–500 per cent by mid-century, depending on demand growth (Statista; CEEW).
Recognising this threat, the Government of India has brought the sector under compliance obligations of the Carbon Credit Trading Scheme (CCTS). Cement is one of the designated obligated entities, tasked with meeting aggressive reduction targets over the next two financial years, effectively binding companies to measurable progress toward decarbonisation and creating compliance-driven demand for carbon reduction and trading credits (NITI 2025).
The industry has responded by deploying incremental decarbonisation measures focused on energy efficiency, alternative fuels, and material substitutions. Process optimisation using AI-driven controls and waste heat recovery systems has made many plants among the most efficient worldwide, typically reducing fuel use by 3–8 per cent and cutting emissions by up to 9 per cent. Trials are exploring kiln firing with greener fuels such as hydrogen and natural gas. Limited blends of hydrogen up to 20 per cent are technically feasible, though economics remain unfavourable at present.
Efforts to electrify kilns are gaining international attention. For instance, proprietary technologies have demonstrated the potential of electrified kilns that can reach 1,700°C using renewable electricity, a transformative technology still at the pilot stage. Meanwhile, given that cement manufacturing is also a highly power-intensive industry, several firms are shifting electric grinding operations to renewable energy.
Material substitution represents another key decarbonisation pathway. Blended cements using industrial by-products like fly ash and ground granulated blast furnace slag (GGBS) can significantly reduce the clinker factor, which currently constitutes about 65 per cent in India. GGBS can replace up to 85 per cent of clinker in specific cement grades, though its future availability may fall as steel plants decarbonise and reduce slag generation. Fly ash from coal-fired power stations remains widely used as a low-carbon substitute, but its supply too will shrink as India expands renewable power. Alternative fuels—ranging from biomass to solid waste—further allow reductions in fossil energy dependency, abating up to 24 per cent of emissions according to pilot projects (TERI; CEEW).
Beyond these, Carbon Capture, Utilisation, and Storage (CCUS) technologies are emerging as a critical lever for achieving deep emission cuts, particularly since process emissions are chemically unavoidable. Post-combustion amine scrubbing using solvents like monoethanolamine (MEA) remains the most mature option, with capture efficiencies between 90–99 per cent demonstrated at pilot scale. However, drawbacks include energy penalties that require 15–30 per cent of plant output for solvent regeneration, as well as costs for retrofitting and long-term corrosion management (Heidelberg Materials 2025). Oxyfuel combustion has been tested internationally, producing concentrated CO2-laden flue gas, though the high cost of pure oxygen production impedes deployment in India.
Calcium looping offers another promising pathway, where calcium oxide sorbents absorb CO2 and can be regenerated, but challenges of sorbent degradation and high calcination energy requirements remain barriers (DNV 2024). Experimental approaches like membrane separation and mineral carbonation are advancing in India, with startups piloting systems to mineralise flue gas streams at captive power plants. Besides point-source capture, innovations such as CO2 curing of concrete blocks already show promise, enhancing strength and reducing lifecycle emissions.
Despite progress, several systemic obstacles hinder the mass deployment of CCUS in India’s cement industry. Technology readiness remains a fundamental issue: apart from MEA-based capture, most technologies are not commercially mature in high-volume cement plants. Furthermore, CCUS is costly. Studies by CEEW estimate that achieving net-zero cement in India would require around US$ 334 billion in capital investments and US$ 3 billion annually in operating costs by 2050, potentially raising cement prices between 19–107 per cent. This is particularly problematic for an industry where companies frequently operate at capacity utilisations of only 65–70 per cent and remain locked in fierce price competition (SOIC; CEEW).
Building out transport and storage infrastructure compounds the difficulty, since many cement plants lie far from suitable geological CO2 storage sites. Moreover, retrofitting capture plants onto operational cement production lines adds technical integration struggles, as capture systems must function reliably under the high-particulate and high-temperature environment of cement kilns.
Overcoming these hurdles requires a multi-pronged approach rooted in policy, finance, and global cooperation. Policy support is vital to bridge the cost gap through instruments like production-linked incentives, preferential green cement procurement, tax credits, and carbon pricing mechanisms. Strategic planning to develop shared CO2 transport and storage infrastructure, ideally in industrial clusters, would significantly lower costs and risks. International coordination can also accelerate adoption.
The Global Cement and Concrete Association’s net-zero roadmap provides a collaborative template, while North–South technology transfer offers developing countries access to proven technologies. Financing mechanisms such as blended finance, green bonds tailored for cement decarbonisation and multilateral risk guarantees will reduce capital barriers.
An integrated value-chain approach will be critical. Coordinated development of industrial clusters allows multiple emitters—cement, steel, and chemicals—to share common CO2 infrastructure, enabling economies of scale and lowering unit capture costs. Public–private partnerships can further pool resources to build this ecosystem. Ultimately, decarbonisation is neither optional nor niche for Indian cement. It is an imperative driven by India’s growth trajectory, environmental sustainability commitments, and changing global markets where carbon intensity will define trade competitiveness.
With compliance obligations already mandated under CCTS, the cement industry must accelerate decarbonisation rapidly over the next two years to meet binding reduction targets. The challenge is to balance industrial development with ambitious climate goals, securing both economic resilience and ecological sustainability. The pathway forward depends on decisive governmental support, cross-sectoral innovation, global solidarity, and forward-looking corporate action. The industry’s future lies in reframing decarbonisation not as a burden but as an investment in competitiveness, climate alignment and social responsibility.

References

  • Infomerics, “Indian Cement Industry Outlook 2024,” Nov 2024.
  • TERI & GCCA India, “Decarbonisation Roadmap for the Indian Cement Industry,” 2023.
  • UN Press Release, GA/EF/3516, “Global Resource Efficiency and Cement.”
  • World Cement, “India in Focus: Energy Efficiency Gains,” 2025.
  • Statista, “CO2 Emissions from Cement Manufacturing 2023.”
  • Heidelberg Materials, Press Release, June 18, 2025.
  • CaptureMap, “Cement Carbon Capture Technologies,” 2024.
  • DNV, “Emerging Carbon Capture Techniques in Cement Plants,” 2024.
  • LEILAC Project, News Releases, 2024–25.
  • PMC (NCBI), “Membrane-Based CO2 Capture in Cement Plants,” 2024.
  • Nature, “Carbon Capture Utilization in Cement and Concrete,” 2024.
  • ACS Industrial Engineering & Chemistry Research, “CCUS Integration in Cement Plants,” 2024.
  • CEEW, “How Can India Decarbonise for a Net-Zero Cement Industry?” (2025).
  • SOIC, “India’s Cement Industry Growth Story,” 2025.
  • MDPI, “Processes: Challenges for CCUS Deployment in Cement,” 2024.
  • NITI Aayog, “CCUS in Indian Cement Sector: Policy Gaps & Way Forward,” 2025.

ABOUT THE AUTHOR:
Dr Yogendra Kanitkar, Vice President R&D, Pi Green Innovations, drives sustainable change through advanced CCUS technologies and its pioneering NetZero Machine, delivering real decarbonisation solutions for hard-to-abate sectors.

Dr Shirish Kumar Sharma, Assitant Manager R&D, Pi Green Innovations, specialises in carbon capture, clean energy, and sustainable technologies to advance impactful CO2 reduction solutions.

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Concrete

Carbon Capture Systems

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Nathan Ashcroft, Director, Strategic Growth, Business Development, and Low Carbon Solutions – Stantec, explores the challenges and strategic considerations for cement industry as it strides towards Net Zero goals.

The cement industry does not need a reminder that it is among the most carbon-intensive sectors in the world. Roughly 7–8 per cent of global carbon dioxide (CO2) emissions are tied to cement production. And unlike many other heavy industries, a large share of these emissions come not from fuel but from the process itself: the calcination of limestone. Efficiency gains, fuel switching, and renewable energy integration can reduce part of the footprint. But they cannot eliminate process emissions.
This is why carbon capture and storage (CCS) has become central to every serious discussion
about cement’s pathway to Net Zero. The industry already understands and accepts this challenge.
The debate is no longer whether CCS will be required—it is about how fast, affordable, and seamlessly it can be integrated into facilities that were never designed for it.

In many ways, CCS represents the ‘last mile’of cement decarbonisation. Once the sector achieves effective capture at scale, the most difficult part of its emissions profile will have been addressed. But getting there requires navigating a complex mix of technical, operational, financial and regulatory considerations.

A unique challenge for cement
Cement plants are built for durability and efficiency, not for future retrofits. Most were not designed with spare land for absorbers, ducting or compression units. Nor with the energy integration needs of capture systems in mind. Retrofitting CCS into these existing layouts presents a series of non-trivial challenges.
Reliability also weighs heavily in the discussion. Cement production runs continuously, and any disruption has significant economic consequences. A CCS retrofit typically requires tie-ins to stacks and gas flows that can only be completed during planned shutdowns. Even once operational, the capture system must demonstrate high availability. Otherwise, producers may face the dual cost of capture downtime and exposure to carbon taxes or penalties, depending on jurisdiction.
Despite these hurdles, cement may actually be better positioned than some other sectors. Flue gas from cement kilns typically has higher CO2 concentrations than gas-fired power plants, which improves capture efficiency. Plants also generate significant waste heat, which can be harnessed to offset the energy requirements of capture units. These advantages give the industry reason to be optimistic, provided integration strategies are carefully planned.

From acceptance to implementation
The cement sector has already acknowledged the inevitability of CCS. The next step is to turn acceptance into a roadmap for action. This involves a shift from general alignment around ‘the need’ toward project-level decisions about technology, layout, partnerships and financing.
The critical questions are no longer about chemistry or capture efficiency. They are about the following:

  • Space and footprint: Where can capture units be located? And how can ducting be routed in crowded plants?
  • Energy balance: How can capture loads be integrated without eroding plant efficiency?
  • Downtime and risk: How will retrofits be staged to avoid prolonged shutdowns?
  • Financing and incentives: How will capital-intensive projects be funded in a sector with
    tight margins?
  • Policy certainty: Will governments provide the clarity and support needed for long-term investment
  • Technology advancement: What are the latest developments?
  • All of these considerations are now shaping the global CCS conversation in cement.

Economics: The central barrier
No discussion of CCS in the cement industry is complete without addressing cost. Capture systems are capital-intensive, with absorbers, regenerators, compressors, and associated balance-of-plant representing a significant investment. Operational costs are dominated by energy consumption, which adds further pressure in competitive markets.
For many producers, the economics may seem prohibitive. But the financial landscape is changing rapidly. Carbon pricing is becoming more widespread and will surely only increase in the future. This makes ‘doing nothing’ an increasingly expensive option. Government incentives—ranging from investment tax credits in North America to direct funding in Europe—are accelerating project viability. Some producers are exploring CO2 utilisation, whether in building materials, synthetic fuels, or industrial applications, as a way to offset costs. This is an area we will see significantly more work in the future.
Perhaps most importantly, the cost of CCS itself is coming down. Advances in novel technologies, solvents, modular system design, and integration strategies are reducing both capital requirements
and operating expenditures. What was once prohibitively expensive is now moving into the range of strategic possibility.
The regulatory and social dimension
CCS is not just a technical or financial challenge. It is also a regulatory and social one. Permitting requirements for capture units, pipelines, and storage sites are complex and vary by jurisdiction. Long-term monitoring obligations also add additional layers of responsibility.
Public trust also matters. Communities near storage sites or pipelines must be confident in the safety and environmental integrity of the system. The cement industry has the advantage of being widely recognised as a provider of essential infrastructure. If producers take a proactive role in transparent engagement and communication, they can help build public acceptance for CCS
more broadly.

Why now is different
The cement industry has seen waves of technology enthusiasm before. Some have matured, while others have faded. What makes CCS different today? The convergence of three forces:
1. Policy pressure: Net Zero commitments and tightening regulations are making CCS less of an option and more of an imperative.
2. Technology maturity: First-generation projects in power and chemicals have provided valuable lessons, reducing risks for new entrants.
3. Cost trajectory: Capture units are becoming smaller, smarter, and more affordable, while infrastructure investment is beginning to scale.
This convergence means CCS is shifting from concept to execution. Globally, projects are moving from pilot to commercial scale, and cement is poised to be among the beneficiaries of this momentum.

A global perspective
Our teams at Stantec recently completed a global scan of CCS technologies, and the findings are encouraging. Across solvents, membranes, and
hybrid systems, innovation pipelines are robust. Modular systems with reduced footprints are
emerging, specifically designed to make retrofits more practical.
Equally important, CCS hubs—where multiple emitters can share transport and storage infrastructure—are beginning to take shape in key regions. These hubs reduce costs, de-risk storage, and provide cement producers with practical pathways to integration.

The path forward
The cement industry has already accepted the challenge of carbon capture. What remains is charting a clear path to implementation. The barriers—space, cost, downtime, policy—are real. But they are not insurmountable. With costs trending downward, technology footprints shrinking, and policy support expanding, CCS is no longer a distant aspiration.
For cement producers, the decision is increasingly about timing and positioning. Those who move early can potentially secure advantages in incentives, stakeholder confidence, and long-term competitiveness. Those who delay may face higher costs and tighter compliance pressures.
Ultimately, the message is clear: CCS is coming to cement. The question is not if but how soon. And once it is integrated, the industry’s biggest challenge—process emissions—will finally have a solution.

ABOUT THE AUTHOR:
Nathan Ashcroft, Director, Strategic Growth, Business Development, and Low Carbon Solutions – Stantec, holds expertise in project management, strategy, energy transition, and extensive international leadership experience.

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